Senate Committee Focuses on Underground Economy and Work Comp

By Greg Jones, Western Bureau ChiefThe head of the California Department of Industrial Relations says compliance with workers’ compensation insurance requirements is one of the best tools for driving the so-called underground economy out of California, and she plans to step up efforts to catch violators next year.

Christine Baker, who was appointed just last week to serve as director of the Department of Industrial Relations pending Senate confirmation, testified during a Dec. 5 hearing of the Select Committee of the California state Senate Business and the Underground Economy that Gov. Jerry Brown has made it a top priority to drive out employers who ignore labor laws and regulations.

“Lack of workers’ compensation coverage is a good indicator that a business may be cheating and taking an unfair competitive advantage of those who do provide coverage and who are operating in compliance with the law,” Baker said.

Brown signed legislation on Oct. 9 authorizing fines of $500 to $15,000 per violation for willfully classifying an employee as an independent contractor. The bill allows civil penalties of $10,000 to $25,000 for a pattern of willful misclassification.

Baker said a collaborative effort between her department, the Employment Development Department and the Workers’ Compensation Insurance Rating Bureau is paying off.

Baker said 479 of 1,498 employers — about 31% of those randomly selected for review by the Employment Development Department this year — did not have workers’ compensation insurance for their employees. Further review found that 80 of the employers actually did have a policy and an additional 45 purchased insurance after receiving a notification from the department.

Baker said the department issued 56 citations against employers who had no workers’ compensation insurance and against 46 employers who let the coverage lapse. Fines totaled $400,958, Baker said.

The department will continue to randomly identify employers to review, but will focus heavily on new employers and those in the construction, agriculture and restaurant industries in 2012, Baker said.

Starting in January, computer monitoring of payroll information reported to the state will also be used to identify employers who are using more workers than they claimed when purchasing a policy or who are logging more work hours than are being reported.

Computer monitoring should also help identify businesses that need to be investigated, sparing headaches for good employers, Baker said.

Bruce Wick, director of risk management for the California Professional Association of Specialty Contractors, testified that sweeps focusing on all contractors in a specific geographic area inherently “pick on some very good employers and waste their time.”

He said he supports the idea of using a computer system to identify “red flags,” as long as state agencies act quickly. He said in the case of Petronella Roofing, an Orange County contractor accused of running the largest known workers’ compensation insurance fraud case in the history of the state, red flags were identified long before the company was shut down.

“When the red flags came up, it took five years to put them out of business,” Wick testified. “Had they been shut down earlier, we could have given more business to legitimate contractors.”

Devon Lynn Kile, 46, on Nov. 30 was sentenced to 10 years of probation and ordered to pay $2.8 million in reimbursement to the Employment Development Department and the Franchise Tax Board. Her husband, Michael Vincent Petronella, was sentenced to 10 years in state prison on Nov. 4, 2010. Prosecutors say the company reported about $3 million in payroll to State Compensation Insurance Fund when they were actually paying about $29 million.

The Contractors State License Board will also be stepping up its efforts next year to ensure contractors are carrying workers’ compensation insurance, according to compliance chief David Fogt.

Fogt said a board review of the more than 300,000 licensed contractors in California found about 60% are exempt from carrying workers’ compensation insurance.

“They’ve signed under penalty of perjury that they have no employees and we know that is not true,” Fogt testified. “The majority have their own workers or they’re picking people up at Home Depot.”

Fogt said Assembly Bill 484, which takes effect on Jan. 1, 2012, requiring contractors to provide proof of coverage or certify their exempt status every two years when renewing their license will help identify noncompliant employers.

The board also plans to target the pool-plastering industry in Southern California, working with district attorney offices in Orange, Los Angeles and San Bernardino counties to bring contractors into court for not having workers’ compensation coverage.

Fogt said for every $1 spent on enforcement efforts, he expects the state will see a $4 return through increased tax collections and penalties.

Sens. Mark DeSaulnier, D-Concord, and Mimi Walters, R-Laguna Hills, asked during the hearing in Sacramento if employers are not carrying workers’ compensation insurance and violating other state laws because there are too many state regulations for them to follow.

Wick said every regulation imposed on legitimate businesses gives the underground contractors a point of leverage, so he thinks the state’s regulatory environment is partially to blame.

Scott Hauge, president of Small Business California, said he thinks some employers may not know the requirements, but the vast majority of those not carrying workers’ compensation are doing so intentionally.

“It is not over regulations,” Hauge said. “Obviously, that should be addressed, but that is a front for somebody. Not to have workers’ compensation and not to pay taxes is unconscionable.”

Willis Places Cat Bond for Calif. State Fund

By Staff Writer NU Online News Service

December 14, 2011

Willis Capital Markets & Advisory, part of insurance broker Willis Group Holdings, announced that it has structured and placed a $200 million catastrophe bond transaction for the State Compensation Insurance Fund, the largest writer of workers’ compensation business in California.

http://www.propertycasualty360.com/2011/12/14/willis-places-cat-bond-for-calif-state-fund

Human Rights | 14.12.2011

Labor conditions pick away at migrant workers’ rights

Großansicht des Bildes mit der Bildunterschrift: Migrant fruit pickers work under backbreaking conditions

While migrant farm workers in California pick most of the state’s fruits and vegetables, experts says too many factors are conspiring against the often illegal immigrants in their struggle for better working conditions.

Few shoppers in a San Francisco area grocery store say they have spent time thinking how their fruit and vegetables got to the shelves.

“I don’t think about it at all. I think most people think about how much am I going to spend,” one shopper said. “I’m guilty of it, most people I know are guilty of it.”

http://www.dw-world.de/dw/article/0,,15601904,00.html

U.S. appeals court revives Oracle overtime lawsuit

By Terry Baynes

Tue Dec 13, 2011 (Reuters) - A federal appeals court on Tuesday revived a class-action lawsuit against Oracle Corp, basing its ruling on a state court decision that employers in California must pay nonresident workers for overtime work performed in the state.

http://www.reuters.com/article/2011/12/14/us-oracle-lawsuit-idUSTRE7BD02820111214

State News:

$1 billion in California budget cuts to kick in soon — Gov. Jerry Brown announced nearly $1 billion in new state budget cuts, slashing spending on higher education and eliminating funding for free school-bus service but avoiding the deeper reductions to public schools that many had feared.

Anthony York and Teresa Watanabe in the Los Angeles Times http://www.latimes.com/news/local/la-me-california-budget-cuts-20111214,0,184027.story?track=rss&utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+latimes%2Fnews%2Flocal+%28L.A.+Times+-+California+|+Local+News%29

Steven Harmon in the San Jose Mercury http://www.mercurynews.com/california-budget/ci_19538724?source=rss

Michael Gardner & Maureen Magee in the San Diego Union-Trib http://www.signonsandiego.com/news/2011/dec/14/schools-spared-from-deepest-cuts/

Wyatt Buchanan, Marisa Lagos in the San Francisco Chronicle http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2011/12/14/MNI81MBUEJ.DTL&feed=rss.pageone

Judy Lin AP http://www.dailynews.com/news/ci_19542701?source=rss

BRIAN JOSEPH in the Orange County Register http://totalbuzz.ocregister.com/2011/12/13/governor-announces-1-billion-in-budget-cuts/80677/

Daniel Weintraub HealthyCal.org — 12/14/11http://www.healthycal.org/archives/6874

Details of Jerry Brown’s trigger cuts – Gov. Jerry Brown announced today that California will impose $980 million in mid-year trigger cuts to a variety of public programs. The official cuts list is as follows: Kevin Yamamura SacBee Capitol Alert — 12/14/11

http://blogs.sacbee.com/capitolalertlatest/2011/12/details-of-browns-trigger-cuts.html

Walters: Good budget news complicates Jerry Brown’s bid for tax boost — California’s public schools received a rare bit of good news Tuesday when Gov. Jerry Brown largely exempted them from automatic reductions in state aid, citing improvements in the economy. Dan Walters in the Sacramento Bee — 12/14/11

http://www.sacbee.com/2011/12/14/4121213/dan-walters-good-budget-news-complicates.html#mi_rss=Dan%20Walters

CalBuzz: Consultants: Brown’s 1st Year Not Bad, Not Great — Jerry Brown’s year one performance as governor has been satisfactory – but hardly stellar, according to the collective wisdom of California’s leading political consultants. Jerry Roberts and Phil Trounstine CalBuzz — 12/14/11

http://www.calbuzz.com/2011/12/o/

Maximum weekly TTD benefits will for the first time exceed $1,000, increasing to $1,010.50 from $986.69. Minimum TTD benefits will increase to $151.57 from $148.

The 2.4% increase is necessary because California Labor Code Section 4453(a)(10) requires the rate for TTD benefits to be increased by an amount equal to the percentage increase in the state’s average weekly wage, the division said.

California’s average weekly wage for the 12 months ending March 31, 2011, was $1,003.55, up from $979.90 for 2010.

Workers’ with dates of injury on or after Jan. 1, 2003, who are receiving life pensions or permanent total disability benefits are also entitled to have their weekly benefit increased based on the state’s average weekly wage.

Source: Division of Workers’ Compensation

California’s Temporary Total Disability Rate for 2012 To Increase October 21, 2011 The California Division of Workers’ Compensation announced on Friday that the minimum and maximum temporary total disability rates for 2012 will increase on Jan. 1. The minimum TTD rate will increase to $151.57 and the maximum TTD rate will increase to $1010.50 per week.

10/13/2011

Gov. Jerry Brown warned about the” veto blues” after the legislature’s passage of more than 600 bills. “You’ve given me 600 bills, and there’s not 600 problems that we need those solutions for,” the governor was quoted as saying.  His comments proved to be especially prophetic in the workers’ compensation arena as he signed a number of mostly non-controversial bills and vetoed most of the significant legislation with various veto messages indicating he was concerned about increasing costs and piecemeal reforms.

Thanks go to the California Workers’ Compensation Institute for its prompt dissemination of the below list of bills signed and vetoed.  The brief summaries are my own and the veto messages are edited portions lifted from the governor’s messages with the vetoed bills:

Bills Signed by Governor Brown:

• AB 335 by Assemblymember Jose Solorio (D-Santa Ana) – Workers’ compensation: notices.

Requires the Division of Workers’ Compensation administrative director with the Commission on Health and Safety and Workers’ Compensation to revise some DWC forms. Removes reference to vocational rehabilitation and substitutes supplemental job displacement voucher references. Eliminates need to send supplemental job displacement voucher NOPE by certified mail at end of temporary disability.

• AB 378 by Assemblymember Jose Solorio (D-Santa Ana) – Workers’ compensation: pharmacy products.

Provides imposition caps on compound drugs at 83% of generic for lowest price generic equivalent until the administrative director adopts a fee schedule.

• AB 397 by Assemblymember William W. Monning (D-Santa Cruz) – Workers’ compensation insurance: contractors.

Requires contractors to prove they are either exempt from coverage or have workers’ compensation coverage when renewing contractors’ licenses.

• AB 585 by Assemblymember Paul Fong (D-Mountain View) – Workers’ compensation: cancer presumption.

Extends existing cancer presumption in Labor Code § 3212.1 to Firefighters working at government installation.

• AB 1168 by Assemblymember Richard Pan (D-Sacramento) – Workers’ compensation: vocational expert fee schedule.
Requires the administrative director to adopt a fee schedule for vocational rehabilitation expert testimony by Jan. 1, 2013

• AB 1426 by Solorio – Workers’ compensation: court administrator.

Eliminates position of court administrator. This position is currently empty and the statutory provisions conflicted with the authority of the administrative director. The functions of the court administrator will be handled primarily through the administrative director’s office.

• SB 457 by Sen. Ronald Calderon (D-Montebello) –Workers’ compensation: liens.

Provides where an employee obtains medical treatment pursuant a medical plan provided by a self-insured employee welfare benefit plan reimbursement shall be determined notwithstanding the official Medical Fee Schedule adopted pursuant to Section 5307.1. Such liens shall be paid pursuant to the terms of the self-insured benefit plan not according to fee schedule.

• SB 684 by Senator Ellen Corbett (D-San Leandro) – Workers’ compensation insurance: dispute resolution: arbitration clauses.

Would allow California employers to arbitrate disputes under insurance policies that arise in California using California law even where the policy may have been written in a different state and provides for arbitration of disputes using another states law.

• SB 826 by Senator Mark Leno (D-San Francisco) –Workers’ compensation: data reporting requirement: administrative penalties.

Provides for imposition of administrative penalties where a claims administrator violates reporting requirements regulations.

Bills vetoed by Gov. Brown:

• AB 211 by Assemblymember Gil Cedillo (D-Los Angeles) – Workers’ compensation: permanent disability benefits. A veto message can be found here:

“This bill would have modified the provisions for providing the Supplemental Job Displacement Voucher from after the PD award till the end of TD. It would also have change the voucher amount to a flat $6000 rather than a structured amount based on the level of PD.”

• AB 584 by Assemblymember Paul Fong (D-Mountain View) – Workers’ compensation: utilization review. A veto message can be found here:

“This bill would have required physicians performing UR services be licensed to practice medicine in CA. The bill would have created different standards for WC UR than the same services in Group health.  The Governor was aware of the effort to impose this unique requirement in WC and did not consider a need to have different approaches in WC than from the rest of the health care industry.”

• AB 947 by Solorio – Workers’ compensation: temporary disability payments. A veto message can be found here:

“This bill would have extended the time for payment of TTD beyond the 104 limit in Labor Code § 4656 where the employee underwent surgery and the period of TD extended beyond the 104 weeks. This bill was amended near the end of the session to limit it to post-surgical cases in an effort to limit the potential expense attached to the changes to Labor Code § 4656.  As originally drafted it would have effectively eliminated the 104-week limitation on TTD.  The recent amendments provided significant limitation on the extension of TTD but the governor appeared concerned the amendments such as this should be part of an overall effort to modify the system and rather than piecemeal changes.”

• AB 1155 by Assemblymember Luis Alejo (D-Salinas) – Workers’ compensation. A veto message can be found here.

“This bill would have interposed additional language in Labor Code § 4663 ostensibly to prevent discrimination on the basis of “immutable characteristics” such as race, gender, sexual orientation etc.  The Governor’s message indicated the law already recognized similar protections and this provision would have potentially generated additional unnecessary litigation increasing employer costs with little corresponding additional protection to employees.”

The tenor of the governor’s messages suggest he is willing to extend additional benefits only if there are some offsetting savings. This was the same message offered by the new administrative director, Rosa Moran, at a presentation she made a few weeks ago at the well-attended California Workers’ Compensation & Risk Conference at Dana Point.

Remember, an optimist is merely one who believes we have the best of all possible workers’ compensation systems; a pessimist is merely one who fears that is true (Paraphrased from James Branch Cabell, The Silver Stallion, 1926)

Richard M. “Jake” Jacobsmeyer is a founding partner of the Shaw, Jacobsmeyer, Crain & Claffey workers’ compensation defense firm in Oakland.

http://www.riskandinsurance.com/story.jsp?storyId=533342333

New law stops bosses using credit info in hiring
Kathleen Pender  San Francisco Chronicle October 13, 2011
Employers can no longer request credit reports on certain employees or job candidates in California under a bill signed this week by Gov. Jerry Brown http://www.sfgate.com/jerry-brown/ .
http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2011/10/13/BUK91LGRAI.DTL#ixzz1ahPZQXQ1

Employees at California’s Keck Medical Strike Over Staffing Decisions
Written by Jaimie Oh | October 12, 2011
Hundreds of Los Angeles-based Keck Medical Center employees began a one-day strike today, as the employees and the hospital work to agree to a contract, according to an LA Times report http://latimesblogs.latimes.com/lanow/2011/10/hospital-workers-strike-at-usc-hospital.html .
http://www.beckershospitalreview.com/hospital-management-adminstration/employees-at-californias-keck-medical-strike-over-staffing-decisions.html

United Farm Workers to Celebrate 50 Years of Service to America’s Workers In 2012
KEENE, Calif., Oct. 14, 2011 /PRNewswire via COMTEX/ — Series of Events Commemorate Historic Anniversary of Organization Founded by Cesar Chavez
The United Farm Workers (UFW) announce today plans to celebrate the organization’s 50 years of service on behalf of the farm worker in America.  The organization founded by Cesar Chavez in 1962, will host a year-long celebration in 2012 with a series of events.  The UFW has partnered with the premier branding event agency LatinPointe to produce and promote the historic events.
http://www.marketwatch.com/story/united-farm-workers-to-celebrate-50-years-of-service-to-americas-workers-in-2012-2011-10-14

http://blog.sfgate.com/nov05election/2011/10/13/californias-landmark-center-for-governmental-studies-to-close-victim-of-polarized-politics-economy/  Patrick McGreevy LA Times PolitiCal http://latimesblogs.latimes.com/california-politics/2011/10/center-for-governmental-studies-to-close.html  Torey Van Oot SacBee Capitol Alert http://blogs.sacbee.com/capitolalertlatest/2011/10/bob-stern-californias-center-for-governmental-studies-announces-closure.html

http://latimesblogs.latimes.com/california-politics/2011/10/prison-hunger-strike-ends.html?utm_source=twitterfeed&utm_medium=twitter

http://www.calbuzz.com/2011/10/17927/

http://www.flashreport.org/blog/2011/10/13/brown-talks-about-public-employee-pension-reform-but-can-he-deliver/  – 10/14/11

Injured Workers Unhappy as Brown Looks to ‘Broad’ Reform

California’s 2011 legislative session started with injured workers thinking a newly-elected Democratic governor would restore benefits slashed by the previous Republican administration. For business, there was concern the hard-fought reforms of the early 2000s would be gutted.

Gov. Jerry Brown ended all speculation on Friday, signing into law 10 bills business supported, or at least didn’t oppose. At the same time, he vetoed four bills opposed by employers and supported by labor that would have carved into some of the provisions of reform legislation passed under former Gov. Arnold Schwarzenegger.

Brown passed bills to control the cost of compound drugs and vocational experts, crack down on illegally uninsured contractors and improve data reporting to better monitor the workers’ comp system. He killed legislation supporters said would improve return-to-work times, prohibit discriminatory apportionment decisions and allow injured workers to collect additional temporary disability benefits beyond the statutory 104-week cap when recovering from surgery.

Jesse Ceniceros, president of Voters Injured at Work, said on Monday that he wasn’t disappointed by Brown’s actions. Instead, he said he was disgusted the governor didn’t do anything to help injured workers.

“What was the sense of replacing a Republican with a Democrat if he’s just going to do what the Republicans tell him to do?” Ceniceros said. “It’s as though we didn’t get rid of Schwarzenegger.”

Jason Schmelzer, chief lobbyist for the California Workers’ Compensation Coalition, praised the governor.

“There’s room for the governor to gloat,” Schmelzer said. “He did a good job of weeding through the issues and signing the good stuff and vetoing the bad stuff, at least according to us, and we think he did just fine.”

Schmelzer said the governor signed only bills where opposing sides were able to work together to eliminate most or all opposition before legislation landed on his desk. He vetoed bills that lacked a consensus.

“It’s probably the right kind of approach,” Schmelzer said. “Where everybody agrees these are uniformly good things, go ahead and go with those. But where there are serious questions about whether something is a wise idea, I think a veto is the best choice.”

Brown didn’t entirely slam the door on injured workers. In veto messages for two bills that intended to increase benefits, he mentioned his desire to find cost savings to offset any benefit increases. His veto message on AB 211 by Gil Cedillo, D-Los Angeles, which would have made supplemental job displacement vouchers available to workers earlier in the claims process says he wants “comprehensive reform.” In his veto of AB 947 by Jose Solorio, D-Santa Ana, which would have allowed workers recovering from surgery to collect temporary disability benefits for up to five years, the governor said reform needs to be done “on a broad and balanced scale.”

Brad Chalk, president of the California Applicants’ Attorneys Association, was upset that Brown vetoed the apportionment bill CAAA sponsored, AB 1155 by Luis Alejo, D-Salinas. He did find a small victory in the veto message that says the bill would not change existing law, because courts already recognize that apportioning to protected classes, including race, gender and nationality, is prohibited.

Chalk said he would consider including the veto message along with documents sent to physicians making apportionment determinations to remind them that genetic characteristics are off limits. A small positive, he noted, because it would help only injured workers who are represented by an attorney.

Apportionment determinations that include reference to race or gender or other prohibited classifications are litigated when a worker is represented, but Chalk said that isn’t the case when an injured worker doesn’t have an attorney.

“I know that discrimination is occurring, and it occurs more often when they don’t have an attorney,” he said.

Chalk said he looks forward to discussions about more comprehensive reform proposals, but Ceniceros is not as thrilled.

Ceniceros said while stakeholders try to hammer out their differences on the elements of the system that need to be reformed, injured workers are still left struggling with education vouchers coming too late to be of any use in retraining and inadequate benefit levels.

He said these problems have been put off for almost eight years, and he doesn’t understand how or why Brown would make injured workers wait at least another year to improve the system.

“The injured workers are a piece of meat thrown into a pond of piranha,” he said. “All you get at the end of the case are the skeletal remains.”

Ceniceros is also pessimistic that stakeholders will be able to put together a comprehensive reform proposal within a year.

Jerry Azevedo, spokesman for the Workers’ Compensation Action Network, said Department of Industrial Relations Director Christine Baker’s knowledge of the workers’ compensation system from her time with the Commission on Health and Safety and Workers’ Compensation (CHSWC) might result in stakeholder discussions that move along more quickly than they have in past years. Brown appointed Baker to head DIR in March.

“If she were to be advising the governor on where to go, she may know how to kick start that process,” he said. “It may not be going back to square one.”

Schmelzer said the basic frame for reform discussions has already been set. Labor wants to increase benefits, and employers aren’t opposed to that — they just want to do it in a way that is sustainable, he said.

“We don’t want to continue the behavior of one side waiting until the other side can’t fight back and then rolling them,” he said. “If we can increase permanent disability benefits and offset those costs, that is a sustainable deal and something we can base future actions on.”

Chalk said the applicants’ attorneys have talked with Baker several times about possible ways to cut costs and offset an increase in permanent disability benefits. He would not tell WorkCompCentral what proposals the attorneys proposed.

“It’s back to consensus-building mode,” he said. “We’re disappointed, but happy to help solve the problems with a major reform package.”

California Gov. Jerry Brown on Friday vetoed four workers’ compensation bills backed by labor, stating in two of his veto messages that he wants to see broad workers’ compensation reform instead of “piecemeal changes” that will increase employer costs.But the governor did find some workers’ comp legislation he could support: Brown signed Assembly Bill 378

http://www.leginfo.ca.gov/cgi-bin/postquery?bill_number=ab_378&sess=CUR&house=B&author=solorio , introduced by Assembly Insurance Committee Chairman Jose Solorio, which will bring compound drugs under the state’s pharmacy fee schedule.Brown also signed Senate Bill 684

http://www.leginfo.ca.gov/cgi-bin/postquery?bill_number=sb_684&sess=CUR&house=B&author=corbett , which will require insurers to provide written disclosure to California employers if the carrier includes in the employer’s policy a provision that requires disputes to be arbitrated or resolved in courts outside of California.Brown’s signature on the compound drugs bill and his vetoes of AB 211, AB 584, AB 947 and AB 1155 brought an immediate accolade from the Association of California Insurance Companies.

“Gov. Brown said yes to an important bill that will curb abuses in the workers’ compensation system and he said no to several bills that would have increased costs or made California’s system more litigious,” stated ACIC Mark Sektnan in a press release. “We commend him for his leadership and his common sense approach. Given the state of California’s economy, Gov. Brown made the right decisions for employers who pay for the system and employees that want jobs and safe working environments.”

AB 211

http://www.leginfo.ca.gov/cgi-bin/postquery bill_number=ab_211&sess=CUR&house=B&author=cedillo , introduced by Assemblyman Gil Cedillo and sponsored by Voters Injured at Work, would have made $6,000 supplemental job displacement vouchers available to injured workers when the treating physician determines the injury is permanent and stationary and there will be some degree of permanent disability. The veto message is here. http://gov.ca.gov/docs/AB_211_Veto_Message.pdfCurrently, injured workers do not receive job displacement vouchers until they receive a permanent disability rating. Supporters of AB 211 said injured workers often get the retraining benefits too late to do any good.

Brown said in his veto message that he recognizes the bill is an effort to improve benefits to workers. “I am however, reluctant to enact piecemeal changes to the workers’ compensation system in the absence of more comprehensive reform that addresses both the cost and benefits under the system.”

Brown made a similar statement in vetoeing AB 947

http://www.leginfo.ca.gov/cgi-bin/postquery?bill_number=ab_947&sess=CUR&house=B&author=solorio  by Solorio, D-Anaheim, which would have allowed up to 240 weeks of temporary disability benefits for injured workers who are still recovering from surgery when the current 104-week cap is exhausted. His veto message is here http://gov.ca.gov/docs/AB_947_Veto_Message.pdf .”It is vital that injured workers receive adequate compensation to provide for their needs when they are unable to work due to work-related injuries,” Brown said. “Workers’ compensation reforms, however, need to be addressed on a broad and balanced scale — ensuring workers receive adequate and timely benefits and treatment, while also ensuring that the costs of the system are sustainable.”

Opponents of AB 947 said it was nothing more than an end-run around the 104-week cap on TD benefits created in 2004. Jerry Azevedo, a spokesman for the Workers’ Compensation Action Network, said if there are specific treatments or injuries that require additional recovery time, they should be identified individually and added to other conditions that are exempted from the 104-week cap.

Brown also vetoed AB 1155

http://www.leginfo.ca.gov/cgi-bin/postquery  by Luis Alejo, D-Salinas. The bill would have stated that apportionment can’t be based on characteristics such as race, gender or nationality. The veto message is here. http://gov.ca.gov/docs/AB_155_Veto_Message-1.pdfTestifying in support of the bill, attorneys said women with broken bones have had awards reduced because they were predisposed for osteoporosis. African Americans have had awards reduced because of a genetic disposition to hypertension, they said.

Jason Schmelzer, a lobbyist for the California Coalition on Workers’ Compensation, said previously that the bill created a new opportunity for applicants’ attorneys to argue whether apportionment is appropriate. No amendment would eliminate that problem from the bill, he said.

Brown apparently was persuaded by the argument, saying in his veto message that the bill would lead to increased litigation.

“At best, that additional litigation would add to employers’ costs for workers’ compensation,” he wrote. “At worst, this bill could disturb the appropriate interpretation of existing law that is already taking shape in the courts.”

Brown vetoed AB 584

http://www.leginfo.ca.gov/cgi-bin/postquery?bill_number=ab_584&sess=CUR&house=B&author=fong  by Paul Fong, D-Cupertino, as well. The bill would have limited utilization review to physicians licensed in California. Supporters of the bill said physicians licensed in the state have more training and are better equipped to determine whether a specific treatment is appropriate for an injured worker. The veto message is here http://gov.ca.gov/docs/AB_584_Veto_Message.pdf .Dr. Stuart Bussey, president of the Union of American Physicians and Dentists, said while testifying in support of the bill before the Senate Committee on Labor and Industrial Relations in June that the state is lucky it has not been sued over using out-of-state doctors for UR. He said the Medical Practices Act prohibits physicians who aren’t licensed in California from making decisions about treatment recommendations made by physicians who are licensed in California.

Opponents of the bill said there is a difference between practicing medicine and conducting utilization review. Theo Pahos, a lobbyist for the Association of California Insurance Companies, testified against the bill, telling the Senate Labor Committee that reviewing a request for treatment is just balancing an individual opinion with the weight of the general occupational medical community.

Brown said in his veto message that limiting utilization review to California-licensed physicians would be an abrupt change and incompatible with how utilization review is conducted by health care service plans.

“I am not convinced that establishing a separate standard for workers’ compensation utilization review makes sense,” Brown wrote.

With the exception of SB 684, Brown’s actions on the six workers’ comp measures brought a near clean sweep for the insurance industry, which had opposed any tinkering with the California workers’ compensation system, absent substantial reforms to shave costs that have been creeping up again after major savings created by legislative reforms in 2003 and 2004.

Insurers lobbied heavily for AB 378, which will establish a maximum 20% mark-up over documented acquisition costs for pharmacy goods dispensed by physicians.

“Studies by the California Workers’ Compensation Institute in 2010, and a report to the Commission on Health and Safety and Workers’ Compensation by the Rand Institute have pointed out the costly abuses involving physician-dispensed compound drugs,” the ACIC said. “Compound medications are often paired with topical and transdermal creams that have not been approved by the U.S. Food and Drug Administration. Since compound medications are a combination of other medications, these medications present unique billing issues and many insurers have seen instances where the bill for a compound drug is several times more expensive than the comparable FDA-approved, commercially available oral dosage. Some of these compound prescriptions are not vetted and could pose safety risks to injured workers.”

California State Compensation Insurance Fund intends to eliminate 1,500 to 1,800 positions — or about 25% of its workforce — by the middle of next year, the carrier announced today. Log on to workcompcentral.com to read a breaking news alert. Full coverage on Friday.
bartman@sbcglobal.net

Reeducation Voucher Delivery Resurfaces in Assembly
By Greg Jones, reporter

California injured worker advocates are trying again to expedite the delivery of vouchers intended to offset the costs of retraining claimants unable to return to their usual work following a workplace accident, saying the current system frustrates workers and prevents them from taking full advantage of rehabilitation opportunities.

Voters Injured at Work and Latino Comp co-sponsored Assembly Bill 211, which was introduced on Jan. 31 by Assembly Member Gilbert Cedillo, D-Los Angeles. The bill would make supplemental job displacement benefit (SJDB) vouchers available earlier in the claims process for newly injured workers.

The Assembly bill would make a $6,000 voucher available 60 days after a claimant has exhausted temporary disability benefits, provided the claimant is no longer able to perform his usual work because of the injury and his employer is unable to make accommodations to bring him back to modified or alternate positions, and his physician has determined that the disability is permanent and stationary. The legislation also has an allowance of up to $1,000 for the purchase of a computer and $500 as a miscellaneous expense that doesn’t need to be itemized or deducted.

If passed, the provisions in Cedillo’s bill will apply only to injuries occurring on or after Jan. 1, 2012.

“This bill would improve the timing of SJDB for injured workers by making the voucher a flat amount of $6,000 and changing the date that an injured worker is eligible to receive the voucher to when the physician has determined that the disability has become permanent and stationary,” said Conrado Terrazas, communications deputy for Cedillo. “This bill expands the use of the voucher to include the purchase of tools required by an educational or training program, the purchase of computer equipment, and payment for travel, among others.”

Jesse Ceniceros with Voters Injured at Work said the current time frame for delivering the SJDB vouchers makes these benefits available too late to be of much use for many injured workers.

“Injured workers aren’t getting any type of retraining and the majority of injured workers, by the time they reach the point where the voucher should be accessible to them, they’ve already moved on with their lives and a lot of them are actually really hurting and they’re settling for the voucher for pennies on the dollar,” Ceniceros said. “If they would be eligible for a $6,000 voucher, I’ve seen them go for as little as $300.”

Under the current system, injuries that occurred on or after Jan. 1, 2004, are covered by Section 4658.5 of the California Labor Code. Under this section SJDB benefits are available only after an award of permanent
disability. Voucher amounts are determined by the permanent disability rating, with injured workers with awards under 15% eligible for $4,000; 15% to 25% eligible for $6,000; 26% to 49% eligible for $8,000; and anything greater eligible for $10,000. These provisions would remain in effect for injuries that occur between Jan. 1, 2004,  and Jan. 1, 2012.

Cedillo introduced legislation similar to AB211 in 2008 and 2009. The wording in the current bill is identical to Senate Bill 3, which he introduced in 2009, with the only exception being the date of injuries covered.

In 2007, then-Gov. Arnold Schwarzenegger vetoed a substantially different bill that had a similar goal.

The wording in Senate Bill 942, introduced by then-Sen. Carol Midgen, D-San Francisco, proposed making the vouchers available if an employer is not able to accommodate an injured worker’s condition within 60 days of a disability becoming permanent and stationary. The legislation required employers to estimate a percentage of disability when determining the amount of money that would be provided, and make adjustments later if the estimated impairment rating was different from the assigned impairment rating.

In his veto message, the governor said the bill addressed a legitimate problem but was vague and would lead to more litigation. He urged the sponsor, Voters Injured at Work, to try to build a consensus with employers and businesses that would address the issue of vouchers as part of a larger effort to improve return-to-work
opportunities.

Ceniceros said efforts to build a consensus of insurance, employers and labor failed ultimately, but the
discussions led to the legislation his organization has sponsored since those talks broke down, including AB211.
Mark Gerlach, a consultant with the California Applicants’ Attorneys Association (CAAA), said settling on a flat rate of $6,000 when some claimants might be entitled to more was a compromise that was intended to make some money more readily available to those who wanted to avail themselves of the benefit.

“There are a number of cases in which an applicant ends up with less money this way,” he said. “From the
standpoint of the worker who actually wants to use this money to provide training or schooling that he or she needs, getting it in a timely manner is just as — if not more — important than getting a couple extra thousand dollars.”

Jason Schmeltzer with the California Coalition on Workers’ Compensation said that the delivery of SJDB
vouchers could be improved, but in the past his organization didn’t support moving up the time frame for determining eligibility.

“We agree that would be a good idea, but in workers’ compensation claims, things need to go in a certain order because it is a regulated, administrative-heavy system by law, not by desire, and certain benchmarks and certain phases in the claim need to be completed before the next phase can start.” he said. “Cedillo has rightly tried to improve upon the benefit that is there now, we just haven’t been able to get there on the specifics because the specifics of the bill haven’t always made sense in the administration of a claim.”

Schmeltzer said he has not reviewed the current proposal and the coalition currently does not have an official position on it. However, he did say he hopes discussions will be more productive this year.

Gerlach said the legislation makes sense in light of efforts by employers to stress return-to-work programs and a recent Rand Corp. study that concluded improving return-to-work times was the best way to control costs for businesses without cutting benefits for workers.

CAAA supported Cedillo’s legislation in 2009, but Gerlach said the organization does not have an official position on the new bill because it has not fully reviewed it.

“It’s an issue that certainly deserves a lot of attention given the emphasis employers and insurers are putting on return-to-work,” he said. “There is ample evidence that the current procedures for trying to get the minimal help that is provided by supplemental job displacement benefits to the injured worker is getting to them too late and is not really helpful to them and if we seriously want to attack the return-to-work issue, this type of change is imperative.”

Gerlach said many workers aren’t taking advantage of the vouchers because the system doesn’t work well.  The use of the vouchers dates back to reform efforts in 2003, when lawmakers decided to scrap vocational rehabilitation and also revise the medical fee schedule and utilization control process.

Gerlach said the criticism with the vocational rehabilitation program wasn’t as much related to costs as it was related to what he considered an erroneous assumption that the rehab program didn’t work. However, based on  an analysis by the Workers’ Compensation Insurance Rating Bureau (WCIRB), spending on rehab after instituting the vouchers has dropped dramatically, suggesting to Gerlach that the current system doesn’t work well either.

WCIRB said insurers spent $470,716,000 on vocational rehabilitation in 2005. By 2009, that number dropped to $48,944,000, a decline of more than 89%.

Ceniceros with Voters Injured at Work said his organization is open to talk with any stakeholders interested in addressing this issue, but as he said in years past, this issue is too important to wait for a consensus before moving ahead.

He also said he is optimistic that new Gov. Jerry Brown will be more amenable to the legislation than his
predecessor.

“We’re hoping that the voters sent the message this last election year that we want a governor in there who is going to be working for the people,” he said. “As you know, Gov. Schwarzenegger did absolutely nothing but work for the insurance industry and business, and in workers’ comp, there were billions of dollars of profits made on the backs of injured workers.”

To read AB211, click here:
http://www.workcompcentral.com/pdf/2011/misc/Cedillo2011AB211.pdf.

Hoch’s Appointment Brings Experience and Controversy to 3rd DCA
By John P. Kamin, Legal Editor

Gov. Arnold Schwarzenegger’s appointment of Andrea Hoch to the 3rd District Court of Appeal drew a mixed reaction from the applicants’ bar: She is considered an industrious attorney with an impressive resume, but she is also the lawyer who implemented a new Permanent Disability Rating Schedule that cut benefits in half while she was administrative director of the Division of Workers’ Compensation.

Gov. Schwarzenegger announced Hoch’s appointment to the appellate court last week. She will take the place of Justice Rick Sims, who has served since 1982.

Hoch is among four new appointees to the appellate court, which consists of a total of 10 justices. The four vacancies are attributable to three retirements, along with Tani Cantil-Sakauye’s ascension to the Chief Justice of the state Supreme Court.

The Commission on Judicial Appointments still must confirm Schwarzenegger’s appointments, and ironically enough, incoming Gov. Edmund G. “Jerry” Brown is one of the three commissioners who participate in that review during a meeting on Dec. 10.

Brown’s current role as state Attorney General entitles him to a seat on the commission. The other commissioners are state Supreme Court Chief Justice Ronald George, and Arthur Scotland, the presiding justice of the 3rd DCA.

While the commission may consider oral testimony about appointees, those wishing to testify must first submit a written request to the commission prior to Dec. 3.

Bart Mehlhop, a Sacramento-based applicants’ attorney who currently has a case pending at the 3rd District, said that he will always remember Hoch as the hard-working administrative director at the DWC in the days after the passage of the controversial Senate Bill 899.

As an applicants’ attorney, he views Hoch as a proponent of the legislation that has reduced benefits for injured workers. Hoch approved regulations that created a new Permanent Disability Rating Schedule — called for by the Senate Bill 899 reform measure — that took effect on Jan. 1, 2005. Studies have shown reforms cut average PD benefits by 40% to 70%. Critics charged that Hoch did not base the new rating schedule on any real data that measured wage losses, despite a statute that requires her to.

Department of Industrial Relations Director John Duncan decided — long after Hoch had departed her position as administrative director — not to update the rating schedule after the division’s wage-loss data showed a need to increase benefits by about 16%. Even though SB 899 requires an update to the schedule, there is no enforcement mechanism. Duncan said employers could not afford the cost increase in the midst of a severe economic downturn.

But Mehlhop points to Hoch as the source of the regulations that slashed his clients’ benefits.

“The dangerous part is that she has set us back for the past six years, in terms of now we’re in violation of the SB 899 statute that called for a reassessment of the permanent disability schedule,” he said. “The PD schedule has not been reassessed, and she was the one that set up the regulations that got around the things that would have been much harder to do legislatively.”

While he disagrees with Hoch’s implementation of the rating schedule regulations, Mehlhop noted that there is a bright side to Hoch’s appointment: She was a highly efficient administrative director, which means that she will likely be highly efficient with her caseload at the appellate court.

Richard “Jake” Jacobsmeyer, a Northern California defense attorney, said he believes Hoch’s appointment will benefit the workers’ compensation community because she has more exposure to workers’ comp than the average justice. He noted that Hoch is well-suited for the bench, because her responsibilities as Schwarzenegger’s legal affairs secretary were far broader than the niche subject of workers’ compensation.

“I think we have to keep in mind that comp was a small percentage of her responsibilities when she was attorney for the governor,” Jacobsmeyer said. “She had a much bigger role than what she did as the administrative director for comp, and probably has a much broader range of experience in general civil litigation than she would, particularly in workers’ compensation. Those kind of issues go into consideration for a justice, it’s rather rare that you see a purely workers’ comp attorney appointed to the appellate court.”

Hoch’s resume appears to provide even more support for Jacobsmeyer’s point. She spent 12 years at the Attorney General’s office, four years as an attorney at the Public Employment Relations Board, two years as counsel for the Agricultural Labor Relations Board and three years in private practice.

Barry Hinden, the current president of the California Applicants’ Attorneys Association, said that CAAA is not taking a formal position on Hoch’s appointment. CAAA had formally opposed her nomination to administrative director of the DWC in 2004 and 2005.

Jacobsmeyer noted that it is somewhat common for outgoing governors to appoint their staffers to the appellate bench. For example, when Jerry Brown was an outgoing governor in 1982, he appointed Justice Tony Kline to the 1st District Court of Appeal.

Coincidentally, Brown is also the governor who appointed Sims – the justice whom Hoch is replacing – to the Placer County Superior Court in 1980. While Sims concurred with a number of workers’ compensation opinions in recent years, he authored few. However, in September 2008, he did write the court’s opinion in Dept. of Corrections and Rehabilitation v. WCAB, No. C057410, 9/10/08.

In that case, Sims ruled that a correctional officer’s heart condition is not subject to apportionment, because the legislative intent behind Labor Code 4663(e) is to protect public safety officers. Sims’ retirement becomes effective today, Nov. 30.

Assuming that the Commission on Judicial Appointments approves Hoch’s appointment, her odds of being assigned a workers’ compensation case anytime soon are relatively low.

Currently, there are five cases at the 3rd District Court of Appeal which the court intends to issue opinions on, and they have been fully briefed for at least a month or more. Those cases are:

• Motheral v. WCAB
• Allied Waste Industries Inc. v. WCAB
• Larkin v. WCAB
• Meeks Building Centers v. WCAB.
• Sedgwick Claims Management Services v. WCAB
• Additionally, there are four cases where parties have filed petitions for a writ of review, including:
• County of San Joaquin v. WCAB
• Popovich v. WCAB
• Ungureanu v. WCAB
• Consolidated Personnel Corp., et al. v. WCAB

For more information about the Commission on Judicial Appointments, go here:
http://www.workcompcentral.com/pdf/2010/misc/NR571011292010.pdf.

SACRAMENTO, CA – The California Applicants’ Attorneys Association (CAAA), whose members represent Californians injured on the job, today released its analysis of six years of experience under Governor Schwarzenegger’s SB 899, saying the law “has failed Californians injured on the job,” in the words of CAAA President, Barry Hinden. “Gov. Schwarzenegger has called his workers’ compensation law a great ‘success.’ We ask, ‘Success for whom?’ SB 899 has been extremely profitable for insurance companies, but a colossal failure for those injured on the job.”

“Most of the insurance premium dollars that employers have paid have gone to insurance company profits and expenses, not to care for on-the-job injuries nor to compensate permanently disabled workers,” said Hinden. “Injured workers have seen their disability compensation plummet to near the bottom of the 50 states. Medical care has been delayed and denied to the point that many physicians will no longer treat injured workers. This is contrary to what was promised, and the governor has refused to remedy this horrible situation for Californians who are injured while working.”

Gov. Schwarzenegger has harmed injured workers by:

• Cutting permanent disability compensation by up to 70%;
• Reducing access to medical treatment;
• Taking away injured workers’ choice of doctor;
• Allowing insurance carriers to pocket billions from denying medical care;
• Cutting off temporary disability to the most severely injured workers; and,
• Reducing disability compensation to minorities, women and seniors through discriminatory “apportionment”

CAAA news release: Schwarzenegger’s Work Comp Legacy, Dec. 2, 2010; page 2 “Gov. Schwarzenegger’s law continues to harm Californians injured on the job,” said Hinden. “The administration has put insurance companies ahead of disabled workers. While insurance carriers racked up record profits, injured workers have set new records for bankruptcy, home foreclosure and suicide. Injured workers have been waiting for years for the governor’s promised revision of compensation for permanent disabilities, but now the governor says he isn’t going to make any changes.”

“Gov. Schwarzenegger put a cap on temporary disability compensation, limited physical therapy to 24 lifetime treatments and has handcuffed the workers’ compensation Judges by taking away their power to order additional benefits when they deem it appropriate,” said Hinden.

Permanent disability compensation has been drastically cut Multiple independent studies, including studies conducted by the California Commission on Health, Safety and Workers Compensation (CHSWC), and the Administration itself, have documented fifty to seventy percent cuts in compensation for permanent disabilities.

Insurance carrier profits skyrocketed under Schwarzenegger’s law “Since 2004, when SB 899 was enacted, the largest portion of employers’ premiums has gone to insurers’ profits and expenses, not to injured workers’ care or compensation for their permanent disabilities. Less than half of the premium collected from employers since 2004 has gone to provide care and compensation for injured workers, while insurance companies have recorded record high profit levels and pocketed more than $26 billion in profits,” said Hinden.

Medical care and disability compensation continue to fall under SB 899 Hinden said a recent filing by the insurance industry to raise rates was totally unjustified, noting that the Insurance Commissioner rejected the entire requested increase. “The insurance industry would like us to believe that their costs are going up, “ Hinden said. “But, in fact, workers injured on the job are still feeling the pain of the horrendous cutbacks in medical care and compensation.” He added that the industry’s own rating bureau projects that the cost of medical care and disability compensation for workers injured in 2009 was 10% lower than 2008, and 12% lower than 2004.

By Sam Gold
A California Injured Worker

I’m an injured worker and I’m writing this article not because I love attorneys, but because “You Have A Right To Know!” and no one else seems to want to tell you the truth! Workers’ Compensation around this country is not operating on a level playing field and here’s one of the reasons why! Part of the insurance industry’s 20 year plan to gain total control of the California Workers’ Compensation system (www.ciaw.org/the20yearplan.html) is to eliminate the only obstacle left in their goal of retaining 100% of every premium dollar paid; that of the injured workers’ legal advocate, the applicants’ attorney.

40% of every premium dollar paid just doesn’t seem to be enough for these greedy insurance companies!

These applicants’ attorneys are some upstanding human beings and incredibly brilliant legal minds who have forsaken other more lucrative disciplines of the law to help those who are at a distinct disadvantage, California’s occupationally injured workers, having been injured in the course of their employment, in many instances due to the negligence of their employers.

First, let’s set the record straight. If you wish to believe our totally clueless governor, Arnold Schwarzenegger, they are greedy trial attorneys who are the proximate cause of the high cost of Workers’ Compensation in California.

Hogwash! That couldn’t be any further from the truth. That’s just a bunch of Schwarzenegger/Chamber of Commerce/Insurance Industry BS!

Unlike insurance company defense attorneys who are paid by the hour like a taxi meter, these applicants’ attorneys are paid at the close of each case, based upon a small percentage of a permanent disability award that is meant to compensate the injured worker for his inability to compete for a lifetime of meaningful employment in the workplace. And some of these cases can take up to 10 years to settle, with those attorneys having to pony up front, all the costs of the litigation for such an extended period of time.

So just precisely who has the financial incentive to make these cases drag on and on; not the applicants’ attorney! He or she doesn’t get paid until the case closes! Get the picture?

One of the big issues right now is the concept of “Apportionment to Causation” which is simply an insurance industry ploy to whittle down the amount of permanent disability settlement to a point where it becomes economically unfeasible for applicants’ attorneys to make a reasonable living taking these cases and representing their clients in an increasingly specialized and technical discipline of the law. They are literally fighting for their economic lives!

Many law firms, who at one time had up to 10 attorneys practicing Workers’ Compensation law, are now just down to one, and of those who are still practicing are getting very picky and choosy about what cases they do take, usually concentrating on those of catastrophic injuries.

What about those smaller cases. Who will be there to represent them in a legal system that takes injured workers and grinds them up to a pulp and spits them out?

This whole Workers Compensation system revolves around public perception, and it’s time that the public understood the gravity of this situation for what it really is, a public policy disaster in the making, not a bunch of Schwarzenegger/Chamber of Commerce/Insurance Industry PR spin meant to misinform them of the truth!

Sam Gold is an injured worker who created the first regularly scheduled television program on the California workers’ compensation system. Injured On The Job (www.injuredonthejob.tv) is produced at state-of-the-art video production facilities in San Francisco and Sacramento, and exposes that fraud and corruption in a manner that the television viewer can easily understand. He also maintains the web site Californians Injured at Work.